WASHINGTON -- The Biden administration is looking to expand reporting requirements on all-cash real estate deals to help crack down on bad actors' use of the U.S. market to launder money made through illicit activity.
The Treasury Department was posting notice Monday seeking public comment for a potential regulation that would address what it says is a vulnerability in the real estate market.
Currently, title insurance companies in just 12 metropolitan areas are required to file reports identifying people who make all-cash purchases of residential real estate through shell companies and only if the transaction exceeds $300,000.
"Increasing transparency in the real estate sector will curb the ability of corrupt officials and criminals to launder the proceeds of their ill-gotten gains through the U.S. real estate market," said Himamauli Das, acting director of Treasury's Financial Crimes Enforcement Network.
Das said the move could "strengthen U.S. national security and help protect the integrity of the U.S. financial system."
The goal, administration officials said, was to prevent those who obtained their money through corrupt or illicit acts from parking their gains in U.S. real estate, driving up prices for ordinary consumers. Still, the officials said, they want to develop the new regulations while minimizing the impact on the real estate sector as a whole.
The metropolitan areas currently facing reporting requirements are Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco and Seattle.
The U.S. real estate market has long been viewed as a stable way station for corrupt government officials around the globe and other illicit actors looking to launder proceeds from criminal activity.
The use of shell companies by current and former world leaders and those close to them to purchase real estate and other assets in the U.S. and elsewhere was recently spotlighted by the International Consortium of Investigative Journalists' publication of the "Pandora Papers."
The leaked documents acquired by the consortium showed King Abdullah II of Jordan, former U.K. prime minister Tony Blair and other prominent figures used shell companies to purchase mansions, exclusive beachfront property, yachts and other assets for the past quarter-century.
The tax dodges can be legal but have spawned various proposals to enhance tax transparency and reinforce the fight against tax evasion.
Congress passed legislation this year requiring shell companies with 20 or fewer employees and less than $5 million in annual sales to report ownership information to the Treasury Department. The law has come under fire from small business advocates, who have said the expanded reporting requirements create additional legal costs. The law also includes carve-outs for larger corporations and certain charitable trusts.
The effort to push for new real estate market regulation comes as the Biden administration on Monday issued its "U.S. Strategy on Countering Corruption."
The strategy was published as President Joe Biden prepares to host the first White House Democracy Summit, a virtual gathering of leaders and civil society experts from more than 100 countries that is set to take place Thursday and Friday.
The strategy offers broad brushstrokes for confronting corruption at home and abroad. It includes calls for the U.S. government to shore up regulatory gaps, elevating anti-corruption in U.S. diplomatic efforts and bolstering the protection of civil society and members of the media, including investigative journalists, who expose corruption.
Agencies are also expected to unveil additional steps as part of the strategy, including the creation of senior anti-corruption jobs across federal departments.
Information for this article was contributed by Aamer Madhani of the Associated Press and by Justin Sink of Bloomberg News (WPNS).